8

- i CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

TABLE OF CONTENTS

8.1 INTRODUCTION

................................ ................................ ................................ ........... 8

- 1

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analysis

............................ 8

- 1

8.1.2 Overview of Life

- Cycle Cost and Payback Period Analysis Inputs

................................ 8

- 2

8.1.3 Use of Residential Energy Consumption Survey and Commercial Building Energy Consumption Survey in Life

- Cycle Cost and Payback Period Analysis

............. 8

- 6

8.2 LIFE

- CYCLE COST ANALYSIS INPUTS

................................ ................................ .... 8

- 6

8.2.1 Total Installed Cost Inputs

................................ ................................ ............................... 8

- 7

8.2.1.1 Manufacturer Costs

................................ ................................ ........................ 8

- 7

8.2.1.2 Markups

................................ ................................ ................................ ......... 8

- 9

8.2.1.3 Total Consum er Price

................................ ................................ .................. 8

- 10

8.2.1.4 Future Product Prices

................................ ................................ ................... 8

- 11

8.2.1.5 Installation Cost

................................ ................................ ........................... 8

- 13

8.2. 1.6 Total Installed Cost

................................ ................................ ...................... 8

- 14

8.2.2 Operating Cost Inputs

................................ ................................ ................................ .... 8

- 15

8.2.2.1 Annual Energy Use Savings

................................ ................................ ........ 8

- 15

8.2.2.2 Energy Prices

................................ ................................ ............................... 8

- 15

8.2.2.3 Energy Price Trends

................................ ................................ ..................... 8

- 22

8.2.2.4 Repair Cost

................................ ................................ ................................ ... 8

- 23

8.2.2.5 Maintenance Cost

................................ ................................ ......................... 8

- 25

8.2.2. 6 Lifetime

................................ ................................ ................................ ........ 8

- 26

8.2.2.7 Discount Rates

................................ ................................ ............................. 8

- 27

8.2.2.8 Compliance Date of Standard

................................ ................................ ...... 8

- 35

8.2.2.9 Base Case Distribution of Efficiency Levels

................................ ............... 8

- 35

8.3 PAYBACK PERIOD INPUT S

................................ ................................ ...................... 8

- 36

8.4 LCC AND PBP RESULTS

................................ ................................ ............................ 8

- 37

8.4.1 Gas

- Fired Hot Water Boilers

................................ ................................ ......................... 8

- 38

8.4.2 Gas

- Fired Steam Boilers

................................ ................................ ................................ 8

- 41

8.4.3 Oil

- Fired Hot Water Boilers

................................ ................................ .......................... 8

- 44

8.4.4 Oil

- Fired Steam Boilers

................................ ................................ ................................ . 8

- 47

8.4.5 Standby Power Results

................................ ................................ ................................ .. 8

- 50

8. 4.5.1 Gas

- Fired Hot Water Boilers

................................ ................................ ....... 8

- 50

8.4.5.2 Gas

- Fired Steam Boilers

................................ ................................ .............. 8

- 53

8.4.5.3 Oil

- Fired Hot Water Boilers

................................ ................................ ........ 8

- 56

8.4.5.4 Oil

- Fired Steam Boilers

................................ ................................ ............... 8

- 59

8.4.5.5 Electric Hot Water Boilers

................................ ................................ ........... 8

- 62

8.4.5.6 Electric Steam Boilers

................................ ................................ .................. 8

- 65

LIST OF TABLES

Table 8.1.1 Summary of Inputs and Key Assumptions Used in the LCC and PBP Analysis

................................ ................................ ................................ ................ 8

- 58

- ii Table 8.2.1 Manufacturer Production Cost for Residential Boilers by Efficiency Level

....... 8

- 8

Table 8.2.2 Summary of National Average Markups on Residential Boilers

......................... 8

- 9

Table 8.2.3 Overall Markup for Residential Boilers by Product Class

................................ . 8

- 10

Table 8.2.4 Average Consumer Price for Residential Boilers ( 2013$ )

................................ 8

- 11

Table 8.2.5 Average To tal Installed Cost for Residential Boilers ( 2013$ )

........................... 8

- 14

Table 8.2.6 Average Residential Electricity Prices in 2011

................................ ................. 8

- 16

Table 8.2.7 Average Commercial Electricity Prices in 2011

................................ ................ 8

- 17

Table 8.2.8 Average Residential Natural Gas Prices in 2011

................................ ............... 8

- 18

Table 8.2.9 Average Commercial Natural Gas Prices in 2011

................................ ............. 8

- 19

Table 8.2.10 Average Residential LPG Prices in 2011

................................ ........................... 8

- 19

Table 8.2.11 Average Commercial LPG Prices in 2011

................................ ......................... 8

- 20

Table 8.2.12 Average Residential Fuel Oil Prices in 2011

................................ ..................... 8

- 21

Table 8.2.13 Ave rage Commercial Fuel Oil Prices in 2011

................................ ................... 8

- 22

Table 8.2.14 Annualized Repair Cost for Residential Boilers ( 2013$ )

................................ .. 8

- 25

Table 8.2.15 Annualized Maintenance Cost for Residential Boilers ( 2013$ )

........................ 8

- 26

Table 8.2.16 Lifetime Parameters for Residential Boilers

................................ ...................... 8

- 27

Table 8.2.17 Types of Household Debt and Equity by Percentage Shares (%)

...................... 8

- 28

Table 8.2.18 Average Nom inal Interest Rates for Household Debt

................................ ....... 8

- 29

Table 8.2.19 Average Real Effective Interest Rates for Household Debt

.............................. 8

- 29

Table 8.2.20 Average Nominal and Real Interest Rates for Household Equity

..................... 8

- 30

Table 8.2.21 Average Shares and Rates for Household Debt and Equity

.............................. 8

- 31

Table 8.2.22 Data Used to Calculate Real Effective Mortgage Rates

................................ .... 8

- 32

Table 8.2.23 Risk free rate and equity risk premium, 2010

- 2012

................................ .......... 8

- 34

Table 8.2.24 Weighted Averag e Cost of Capital for Sectors that Purchase Residential

Boilers

................................ ................................ ................................ ................ 8

- 35

Table 8.2.25 Base Case Market Shares in (2020) by Efficiency Level for Boilers

................ 8

- 36

Table 8.4.1 Gas

- Fired Hot Water Boilers: LCC and PBP Results

................................ ........ 8

- 38

Table 8.4.2 Rebuttable Payback Period for Gas

- Fired Hot Water Boilers

........................... 8

- 40

Table 8.4.3 Gas

- Fired Steam Boilers: LCC and PBP Results

................................ .............. 8

- 41

Table 8.4.4 Rebuttable Payback Period for Gas

- Fired Steam Boilers

................................ .. 8

- 43

Table 8.4.5 Oil

- Fired Hot Water Boilers: LCC and PBP Results

................................ ......... 8

- 44

Table 8.4.6 Rebuttable Payback Period for Oil

- Fired Hot Water Boilers

............................ 8

- 46

Table 8.4.7 Oil

- Fired Steam Boilers: LCC and PBP Results

................................ ................ 8

- 47

Table 8.4.8 Rebuttable Payback Period for Oil

- Fired Steam Boilers

................................ ... 8

- 49

Table 8.4.9 Gas

- Fired Hot Water Boilers: Standby Power LCC and PBP Results

.............. 8

- 50

Table 8.4.10 Reb uttable Payback Period for Gas

- Fired Hot Water Boilers (Standby)

.......... 8

- 52

Table 8.4.11 Gas

- Fired Hot Water Boilers: Standby Power LCC and PBP Results

.............. 8

- 53

Table 8.4.12 Rebuttable Payback Period for Gas

- Fired Steam Boilers (Standby)

................. 8

- 55

Table 8.4.13 Oil

- Fired Hot Water Boilers: Standby LCC and PBP Results

........................... 8

- 56

Table 8.4.14 Rebuttable Payback Period for Oil

- Fired Hot Water Boilers (Standby)

............ 8

- 58

Table 8.4.15 Oil

- Fired Steam Boilers: LCC and PBP Results

................................ ................ 8

- 59

Table 8.4.16 Rebuttable Payback Period for Oil

- Fired Hot Water Boilers (Standby)

............ 8

- 61

Table 8.4.17 Electric Hot Water Boilers: Standby LCC and PBP Results

............................. 8

- 6 2

Table 8.4.18 Rebuttable Payback Period for Electric Hot Water Boilers (Standby)

.............. 8

- 64

Table 8.4.19 Electric Steam Boilers: Standby LCC and PBP Results

................................ .... 8

- 658

- iii Table 8.4.20 Rebuttable Payback Period for Electric Steam Boilers (Standby)

..................... 8

- 67

LIST OF FIGURES

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP

....................... 8

- 4 Figure 8.2.1 Historical Nominal and Deflated Producer Price Indexes for Heating Equipment Manufacturing

................................ ................................ ................. 8

- 12 Figure 8.2.2 Projected Residential Energy Prices

................................ ................................ . 8

- 23 Figure 8.2.3 Projected Commercial Energy Prices

................................ ............................... 8

- 23 Figure 8.4.1 Distribution of LCC Savings for Gas

- Fired Hot Water Boilers

........................ 8

- 39 Figure 8.4.2 Distributions of PBP for Gas

- Fired Hot Water Boilers

................................ ..... 8

- 40 Figure 8.4.3 Distribution of LCC Savings for Gas

- Fired Steam Boilers

............................... 8

- 42 Figure 8.4.4 Distributions of PBP for Gas

- Fired Steam Boilers

................................ ............ 8

- 43 Figure 8.4.5 Distribution of LCC Savings for Oil

- Fired Hot Water Boilers

.......................... 8

- 45 Figure 8.4.6 Distributions of PBP for Oil

- Fired Hot Water Boilers

................................ ...... 8

- 46 Figure 8.4.7 Distribution of LCC Savings for Oil

- Fired Steam Boilers

................................ 8

- 48 Figure 8.4.8 Distributions of PBP for Oil

- Fired Steam Boilers

................................ ............. 8

- 49 Figure 8.4.9 Distribution of LCC Savings for Gas

- Fired Hot Water Boilers (Standby)

........ 8

- 51 Figure 8.4.10 Distributions of PBP for Gas

- Fired Hot Wat er Boilers (Standby)

.................... 8

- 52 Figure 8.4.11 Distribution of LCC Savings for Gas

- Fired Steam Boilers (Standby)

.............. 8

- 54 Figure 8.4.12 Distributions of PBP for Gas

- Fired Steam Boilers (Standby)

........................... 8

- 55 Figure 8.4.13 Distribution of LCC Savings for Oil

- Fired Hot Water Boilers (Standby)

......... 8

- 57 Figure 8.4.14 Distributions of PBP for Oil

- Fired Hot Water Boilers (Standby)

...................... 8

- 58 Figure 8.4.15 Distribution of LCC Savings for Oil

- Fired Steam Boilers (Standby)

................ 8

- 60 Figure 8.4.16 Distributions of PBP for Oil

- Fired Steam Boilers (Standby)

............................ 8

- 61 Figure 8.4.17 Distribution of LCC Savings for Electric Hot Water Boilers (Standby)

........... 8

- 63 Figure 8.4.18 Distributions of PBP for Electric Hot Water Boilers (Standby)

........................ 8

- 64 Figure 8.4.19 Distribution of LCC Savings for Electric Steam Boilers (Standby)

.................. 8

- 66 Figure 8.4.20 Distributions of PBP for Electri c Steam Boilers (Standby)

............................... 8

- 678

- 1 CHAPTER 8. LIFE

- CYCLE COST AND PAYBA CK PERIOD ANALYSIS

8.1 INTRODUCTION

The effect of amended st andards on individual customers usually includes a reduction in operating cost and an increase in purchase cost. This chapter describes two metrics used in the analysis to determine the economic impact of standards on individual residential consumers

.

• Lif e

- cycle cost (LCC) is the total customer cost over the life of an appliance or product, including purchase costs and operating costs (which in turn include maintenance, repair, and energy costs). Future operating costs are discounted to the time of purchas e and summed over the lifetime of the appliance or product.

• Payback period (PBP) measures the amount of time it takes customers to recover the assumed higher purchase price of more energy

- efficient products through reduced operating costs.

The U.S. Department of Energy (DOE) conducted the LCC and PBP analysis using a spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a commercially available software program), the LCC and PBP model generates a Monte Carlo

simula tion to perform the analysis by incorporating uncertainty and variability considerations in certain of the key parameters as discussed further in section 8.1.1

.

Inputs to the LCC and PBP analysis of residential boiler products are discussed in

sections 8.2 and Table 8.2.23

, respectively. Results for each metric are present ed in section 8.4

. Key variables and calculations are presented for each metric. The calculations discussed here were performed with a series of Microsoft Excel spreadsheets that are accessible over the Internet ( http://www1.eere.energy.gov/buildings/appli ance_standards/rulemaking.aspx?ruleid=62 ).

Details of the spreadsheets and instruct ions for using th em are discussed in appendix 8

- A.

8.1.1 General Approach for Life

- Cycle Cost and Payback Period Analys i s

In recognition of the fact that each residential buildin g using boilers is unique, variability and uncertainty are analyzed by performing the LCC and PBP calculations detailed here for a representative sample of individual households and commercial buildings. The results are expressed as the number of buildings experiencing economic impacts of different magnitudes. The LCC and PBP model was developed using Microsoft Excel spreadsheets combined with Crystal Ball. The LCC and PBP analysis explicitly model both the uncertainty and the variability in the model’s inp uts using Monte Carlo simulation and probability distributions (see appendix

8

- B)

.

The LCC analysis used the estimated energy use for each residential boiler unit as described in the energy use analysis in chapter 7. Energy use of residential boilers is se nsitive to

climate and therefore varies by location within the United States. Aside from energy use, other8

- 2 important factors influencing the LCC and PBP analysis include energy prices, installation costs, product distribution markups, and sales tax es

.

A certain fraction of residential boilers is used for commercial applications. This fraction determines the frequency at which the model’s sampling process will select an item from the commercial category.

As mentioned previously , DOE generated LCC and PBP r esults as probability distributions using a simulation based on Monte Carlo analysis methods, in which certain key inputs to the analysis consist of probability distributions rather than single

- point values. Therefore, the outcomes of the Monte Carlo analy sis can also be expressed as probability

distributions. As a result, the Monte Carlo analysis produces a range of LCC and PBP results. A distinct advantage of this type of approach is that DOE can identify the percentage of customers achieving LCC savings or attaining certain PBP values due to an increased efficiency level, in addition to the average LCC savings or average PBP for that efficiency level.

The LCC and PBP results are displayed as distributions of impacts compared to a base

case

. T he base case efficiency is for 2020 and reflect s the expected distribution of efficiency levels by product class.

8.1.2 Overview of Life

- Cycle Cost and Payback Period Analys i s Inputs

The LCC is the total customer cost over the life of the product, including purchase price ( including retail markups, sales taxes, and installation costs) and operating cost (including repair costs, maintenance costs, and energy cost). Future operating costs are discounted to the time of purchase and summed over the lifetime of the product. The P BP is the increase in purchase cost of a higher efficiency product divided by the change in annual operating cost of the product. It represents the number of years that it will take the customer to recover the increased purchase cost through decreased oper ating costs. In the PBP calculation , future costs are not discounted.

Inputs to the LCC and PBP analysis are categorized as: (1) inputs for establishing the purchase cost, otherwise known as the total installed cost; and (2) inputs for calculating the

oper ating cost ( i.e. , energy, maintenance, and repair costs).

The primary inputs for establishing the total installed cost are:

• Baseline manufacturer selling price : The baseline manufacturer selling price (MSP) is the price charged by the manufacturer to a who lesaler for product meeting existing minimum efficiency (or baseline) standards. The MSP includes a markup that converts the cost of production ( i.e. , the manufacturer cost) to a MSP.

• Standard

- level manufacturer selling price increase : The standard

- level M SP is the incremental change in MSP associated with producing product at each of the higher efficiency standard levels.8

- 3 • Markups and sales tax : Markups and sales tax are the wholesaler and contractor margins and state and local retail sales taxes associated with converting the MSP to a customer price.

• Installation cost : Installation cost is the cost to the customer of installing the product.

Th e installation cost represents all costs required to install the product but does not

include the marked

- up customer product price. The installation cost includes labor, overhead, and any miscellaneous materials and parts.

The primary inputs for calculati ng the operating cost are:

• Product energy consumption : The product energy consumption is the site energy use

associated with the use of the boiler to provide space conditioning to the building.

• Energy Prices : Electricity, natural gas, liquid petroleum gas (LPG), and fuel oil prices are determined using average monthly energy prices.

• Electricity, natural gas, and fuel oil price trends : The Energy Information Administration’s (EIA’s) Annual Energy Outlook 2013 ( AEO 201 3 ) 1 is used to forecast

energy prices into the future. For the results presented in this chapter, DOE used the AEO

201 3 R eference case to forecast future energy prices.

• Maintenance costs : The labor and material costs associated with maintaining the operation of the equipment

.

• Repair costs : The labor and material costs associated with repairing or replacing components that have failed.

• Lifetime : The age at which the boiler is retired from service.

• Discount rate : The rate at which future costs and savings are discount ed to establish their present value.

Figure 8.1.1 graphically depicts the relationships between the installed cost and operating cost inputs for the calculation of the LCC and PBP.8

- 4 Figure 8.1.1 Flow Diagram of Inputs for the Determination of

LCC and P BP

Table 8.1.1 provides descriptions of the various inputs to the calculation of the LCC and PBP. As noted earlier, most of the inputs are characterized by proba bility distributions that capture variability in the input variables. Manufacturer Sales

Price Standard i= 1

... n

Manufacturer Sales

Price Standard i= 1

... n

Installation Costs Installation Costs

Repair Costs

Repair Costs Lifetimes Lifetimes Annual Maintenance Electricity Consumption

Electricity Consumption

Manufacturer Base

Price

Total Installed Cost (Std i

– Base) Manufacturer Base

Price

Contractor Markups Wholesaler/

Distributor Markup

Electricity Prices Equipment Prices

Sales Tax

Manufacturer Selling Price (Base)

Installation Costs Manufacturer Selling

Price Standard i= 1

... n

Electricity Consumption Annual Energy Costs

Annual Maintenance

Repair Costs Annual Operating Cost (Std i

- Base) Payback

Period

Discount Rate

Lifetimes Lifetime Operating Cost (Std

i

– Base) Lifecycle

Cost

Annual Maintenance

Costs Manufacturer Sales

Price Standard i= 1

... n

Manufacturer Sales

Price Standard i= 1

... n

Installation Costs Installation Costs

Repair Costs

Repair Costs Lifetimes Lifetimes Annual Maintenance Electricity Consumption

Electricity Consumption

Manufacturer Base

Price

Total Installed Cost (Std i

– Base) Manufacturer Base

Price

Contractor Markups Wholesaler/

Distributor Markup

Electricity Prices Equipment Prices

Sales Tax

Manufacturer Selling Price (Base)

Installation Costs Manufacturer Selling

Price Standard i= 1

... n

Electricity Consumption Annual Energy Costs

Annual Maintenance

Repair Costs Annual Operating Cost (Std i

- Base) Payback

Period

Discount Rate

Lifetimes Lifetime Operating Cost (Std

i

– Base) Lifecycle

Cost

Annual Maintenance

Costs8

- 5 Table 8.1.1 Summary of Inputs and Key Assumptions

Used in the

LCC and

PBP Analysis
Inputs Description Affecting Installed Costs

Product Price Derived MSP for boiler units at different heating and air conditioning input capacities (from the engineering analysis) and multiplied by wholesaler markups and contractor markups plus sales tax (from markups analysis). Used the probability distribution for the different markup s to describe their variability.

Installation Cost Includes installation labor derived from RS Means Residential Cost Data 201 3

. 2

Overhead and materials costs and profits are assumed to be included in the contractor’s markup. Thus, the total installed cost equals the consumer product price (manufacturer cost multiplied by the various markups plus sales tax) plus

the in stallation cost. Affecting Operating Costs Annual Energy Use See chapter 7.

Energy Efficiency The Annual Fuel Utilization Efficiency (AFUE) is the efficiency descriptor for

residential boilers

. Residential boiler test procedure calculation methodologies are used to determine the annual energy consumption associated with the

considered standard level s

.

Energy Prices C osts were calculated for RECS 2009 households from monthly marginal average electricity and natural gas, LPG, or fuel oil pric es in each of 30 states and groups of states in RECS 2009. a Residential prices were escalated by the

AEO 201 3 forecasts to estimate future electricity prices. Escalation was performed at the census division level and aggregated to the regions used in the study. Costs were calculated for CBECS 2003 buildings from monthly marginal average electricity and natural ga s, LPG, or fuel oil prices in each of 9 divisions in CBECS 2003. Commercial prices were escalated by the AEO 2013 forecasts to estimate future electricity prices. Escalation was performed at the census

division level.

Maintenance Cost The cost associated with maintaining the operation of the product ( e.g. , checking blower). Annual maintenance cost does not change as a function of

MSP.

Repair Cost Estimated the annualized repair cost for baseline efficiency boiler product, based on costs of major repair ( such as motor replacement), from a variety of published sources. It is assumed that repair costs would vary for higher efficiency levels.

a R ECS 2009 provides 27 regions (also called reportable domains). The 27 th region originally includes Oregon, Washington , Alaska, and Hawaii. Alaska and Hawaii are subdivided into separate regions (28 and 29, respectively), based on cooling and heating degre e days. In addition, region 14 originally include d West Virginia, which has been disaggregated into region 30 based on cooling and heating degree days. See Appendix 7

- A for more details.8

- 6 Affecting Present Value of Annual Operating Cost Savings

Product Lifetime Used the probability distribution of lifetimes developed for boiler s

.

Discount Rate Mean real discount rates ranging from 0 percent to 10.7 percent for various

classes of residential customers based on Federal Reserve Board’s Survey of

Consumer Finances . Probability distributions are used for the discount rates. Mean real discount rates ranging from 0 percent to 10. 9 percent for various

classes of commercial customers based on Federal Reserve Board’s Federal

Reserve Statistical Releases

– Selected Intere st Rates

. b Probability distributions

are used for the discount rates.

Date Standard

Become s Effective 2020 (5 years after expected publication of the final rule)

All of the inputs depicted in Figure 8.1.1 and summarized in Table 8.1.1 ar e discussed in

sections 8.2 and Table 8.2.23

.

8.1.3 Use of Residential Energy Consumption Survey and Commercial Bui lding Energy

Consumption Survey in Life

- Cycle Cost and Payback Period Analysis

The LCC and PBP calculations detailed here are for a representative sample of individual

boiler users

. The residential boiler s are assumed to be installed both i n residential and

commercial buildings.

As explained in chapter 7, t he Energy Information Admi nistration (EIA) ’s 2009 Residential Energy Consumption Survey ( RECS 2009 ) 3 serves as the basis for determining the representative residential sample, while EIA’s 2003 Commercial Building Energy Consu mption Survey (CBECS 2003). 4 RECS collects energy

- related data for occupied primary housing units

in the United States. RECS 2009 included data from 12,083 housing units that represent almost

113.6 million households. CBECS collects energy

- related data for commercial buildings in the

United States . CBECS 2003 included data from 5,215 buildings representing 4 .9 million buildings.

Appendix 7

- A presents the variables used and their definitions, as well as further information about the derivation of the household and building samples.

8.2 LIFE

- CYCLE COST ANALYSIS INPUTS

Life

- cycle cost is the total customer cost over the life of a product, including purchase cost and operating costs (which are composed of energy costs, maintenance costs, and repair costs). Future operating costs are discounted to the time of purchase and summed over the lifetime of the product. Life

- cycle cost is defined by the following equation:

b The Federal Reserve Statistical Release reference includes historical data sets for state and local bonds, CDs, and corporate bonds. 

# ∑

= 

### + + = N

t t

t 

### r OC IC LCC

1 

### ) 1 /(8

- 7 Eq. 8

. 1
Where:

LCC = life

- cycle cost ($),

IC = total installed cost ($), ∑ = sum over the lifetime, from year 1 to year N, where N = lifetime of product (years),

OC = operating cost ($),

r = discount rate, and

t = year for which operating cost is being determined

.

DOE expresses all the costs in 2013$ . Total installed cost, operat ing cost, lifetime, and discount rate are discussed in the following sections. In the LCC analysis, the year of product purchase is assumed to be 20 20 , the assumed effective date of energy conservation standards for

residential boilers

.

8.2.1 Total Installed Cos t Inputs

The total installed cost to the c on s u mer is defined by the following equation:

Eq. 8

. 2
Where:

EQP = product price ($) ( i.e. , customer price for the product only), and

INST = installation cost ($) ( i.e. , the cost for labor and materials).

The product price is based on the distribution channel through which the customer purchases the product. As discussed in chapter 6, DOE defined one major distribution channel for new units to describe how the produ ct passes from the manufacturer to the customer: the manufacturer sells the product to a wholesaler or distributor, who sells to a mechanical

cont ractor hired by a general contractor. The general contractor purchases a nd installs the product on behalf of t he customer and adds its markup to the mechanical contractor’s price. Replacement products follow the same distribution channel, except that there is no general contractor. Instead, the mechanical contractor takes on the general contractor’s function.

The remainder of this section provides information about the variables DOE used to calculate the total installed cost for residential boiler products.

8.2.1.1 Manufacturer Costs

DOE developed the manufacturer costs for boilers as described in chapter 5, Engineering

A nalysis. The manufacturer costs at each efficiency level are shown in Table 8.2.1

. INST EQP IC + =8

- 8 Table 8.2.1 Manufacture

r Production

Cost for

Residential

Boilers by Efficiency

Level

Product Class Efficiency Level Manufacturer

Production

Cost Incremental

Cost

2013$ 2013$

Gas

- Fired Hot Water Boiler 82% AFUE

- Baseline $643.68

-

83% AFUE

- Increased HX Area $651.07 $7.39

84% AFUE

- Increased HX Area $659.34 $15.66

85% AFUE

- Increased HX Area $729.10 $85.42

90% AFUE

- Condensing

Baseline $1,019.07 $375.39

92% AFUE

- Increased HX Area $1,161.93 $518.25

96% AFUE

- Max Tech $1,466.43 $822.75

Gas

- Fired Steam Boiler 80% AFUE

- Baseline $753.97

-

82% AFUE

- Increased HX Area $769.56 $15.59

83% AFUE

- Max Tech $818.17 $64.20

Oil

- Fired Hot Water Boiler 84% AFUE

- Baseline $1,242.73

-

85% AFUE

- Increased HX Area $1,312.74 $70.01

86% AFUE

- Increased HX Area $1,422.74 $180.01

91% AFUE

- Condensing (Max Tech) $2,033.91 $791.18

Oil

- Fired Steam Boiler 82% AFUE

- Baseline $1,266.71

-
84% AFUE

- Increased HX Area $1,406.72 $140.01

85% AFUE

- Increased HX Area $1,457.60 $190.89

86% AFUE

- Max Tech $1,548.64 $281.93

In order to capture variations in manufacturer production costs, DOE derived

manufactured cost adders for different boiler input capacit ies

.8

- 9 8.2.1.2 Markup s

For a given distribution channel, the overall markup is the value determined by multiplying all the assoc iated markups a nd the applicable sales tax together to arrive at a single overall distribution chain markup value. The overall markup is multiplied times the baseline or

standard

- compliant manufacturer cost to arrive at the price paid by the customer. Beca use there are baseline and incremental markups associated with the wholesaler and mechanical contractor, the overall markup is also divided into a baseline markup ( i.e. , a markup used to convert the baseline manufacturer price into a customer price) and an incremental markup ( i.e. , a markup

used to convert a standard

- compliant manufacturer cost increase due to an efficiency increase into an incremental customer price). Markups can differ depending on whether the product is being purchased for a new construc tion installation or is being purchased to replace an existing product. DOE developed the overall baseline markups and incremental markups for both new construction and replacement applications as a part of the markups analysis (chapter 6).

Based on the pe rcentages of the market attributed to each distribution channel

, Table

8.2.2 and Table 8.2.3 display the weighted

- average overall markups and their associated components for the baseline and incremental markups, respectively.

Table 8.2.2 Summary of

National Average Markups on

Residential

Boilers Replacement New Construction

Baseline Markup Incremental Markup National

Account : Baseline/

Incr.

M arkup Baseline Markup Incremental Markup National

Account : Baseline/

Incr. Markup

Manufacturer 1.41 1.41

Wholesaler 1.36 1.10 1.36/1.10 1.36 1.10 1.36/1.10

Mechanical

Contractor 1.53 1.22

-- 1.45 1.15

--

General

Contractor --

-- -- 1.31 1.19

--

Sales Tax 1.06 1.06 1.06

-- -- 1.06

Overall Markup 3.12 2.01 2.04/1.64 3.64 2.12 2.04/1.64

Because the relative importance of new construction and replacements in total shipments

varies among the product classes, the total markup varies as well ( Table 8.2.3 ).8

- 10 Table 8.2.3 Overall Markup for

Residential Boilers by

Product

Class

Product Class Baseline Markup Incremental Markup

Gas

- F ired Hot Water Boiler 3.11 1.97

Gas

- F ired Steam Boiler 3.06 1.97

Oil

- F ired Hot Water Boiler 3.23 2.11

Oil

- F ired Steam Boiler 3.00 1.96

Electric Hot Water Boiler 3.05 2.01

Electric Steam Boiler 3.05 2.01

8.2.1.3 Total Consumer Price

DOE derived the consumer product price for the baseline product by taking the product of the baseline manufacturer cost and the baseline overall markup (including the sales tax). For

each efficiency level above the baseline , DOE derived the consumer produc t price by taking baseline product consumer price and adding to it the product of the incremental manufacturer

cost and the incremental overall markup (including the sales tax). Markups and the sales tax all can take on a variety of values, depending on lo cation, so the resulting total installed cost for a particular efficiency level is represented by a distribution of values.

Table 8.2.4 presents the average consume r product price for each boiler product class at each efficiency level examined.8

- 11 Table 8.2.4 Average

Consumer

Price for

Residential

Boilers ( 2013$ )

Product Class Efficiency Level Average

Consumer

Price Incremental

Cost

2013$ 2013$

Gas

- Fired Hot Water

Boiler 82% AFUE

- Baseline $2,039.64

-
83% AFUE

- Increased HX Area $2,054.78 $15.14

84% AFUE

- Increased HX Area $2,071.72 $32.08

85% AFUE

- Increased HX Area $2,214.65 $175.01

90% AFUE

- Condensing Baseline $2,808.74 $769.11

92% AFUE

- Increased HX Area $3,101.44 $1,061.80

96% AFUE

- Max Tech $3,725.31 $1,685.67

Gas

- Fired Steam Boiler 80% AFUE

- Baseline $2,389.11

-
82% AFUE

- Increased HX Area $2,421.05 $31.94

83% AFUE

- Max Tech $2,520.65 $131.53

Oil

- Fired Hot Water

Boiler 84% AFUE

- Baseline $4,955.55

-
85% AFUE

- Increased HX Area $5,118.28 $162.73

86% AFUE

- Increased HX Area $5,373.95 $418.40

91% AFUE

- Condensing (Max Tech) $6,794.51 $1,838.96

Oil

- Fired Steam Boiler 82% AFUE

- Baseline $4,105.16

-
84% AFUE

- Increased HX Area $4,396.31 $291.15

85% AFUE

- Increased HX Area $4,502.11 $396.96

86% AFUE

- Max Tech $4,691.43 $586.27

8.2.1.4 Future Product Prices

In its 2011 central air conditioning, heat pump, and furnace standards rulemaking, 5 DOE derived a forecast of future furnace prices based on an analysis of the historic trend in the producer price index (PPI) for furnaces. Similarly, DOE believes that the historic PPI of heating equipment provide a reasonable basis for modeling the price trend of residential boilers

.8

- 12 DOE obtained historical PPI data for heating equipment from 19 80

- 201 2 from the Bureau of Labor Statistics’ (BLS). c The PPI data reflect nominal prices, adjusted for product quality changes. An inflation

- adjusted (deflated) price index for heating equipment manufacturing was calculated by dividing the PPI seri es by the Gross Domestic Product Chained Price Index ( see Figure 8.2.1 ).

Figure 8.2.1 Historical Nominal and Deflated Producer Price

Indexes for Heating Equipment Manufacturing

From 1980 to 200 6

, the deflated price index for heating equipment was relatively

constant

. Since then, the index has risen, primarily due to rising prices of copper, aluminum, and steel products which are the major raw ma terial used in heating equipment

. The rising prices for copper and steel products w ere primarily a result of strong demand from China and other emerging economies. Given the slowdown in global economic activity in recent years

, DOE believes that the extent to which the trends of the past five years will continue is very uncertain.

Theref ore, DOE decided to use constant prices as the default price assumption to project future heating equipment prices. Thus, projected prices for the LCC and PBP analysis are equal to the 2012 values for each efficiency level in each product class.

c Series ID PCU 3353123353121 ; http://www.bls.gov/ppi/ 0.000 0.200 0.400 0.600 0.800 1.000 1.200

0 50 100 150 200 250 300Deflated PPI ($2012; 2012=1)Nominal PPI (1980=100)

Heating equipment PPI Deflated heating equipment PPI (2012=1)8

- 13 8.2.1.5 Installati on Cost

DOE’s analysis of installation costs accounts for regional differences in labor costs. DOE

estimated the installation costs at each considered efficiency level using a variety of sources, including RS Means 2012 Residential Cost Data

, 6 manufacturer literature, and information from expert consultants. For a detailed di scussion of the development of installation costs , see

a

ppendix 8

- D

.

The installation cost is the cost to the consumer of installing the boiler . The cost of installation covers all labor and material costs associated with the replacement of an existing

bo iler or the installation of a boiler in a new home, as well as delivery of the new boiler, removal of the existing boiler, and any applicable permit fees. Higher efficiency boiler s may require additional installation costs. DOE’s analysis of installation c osts estimate d specific installation costs for each sample household based on building characteristics given in RECS 2009

.

DOE gave separate consideration to the cost of installing a condensing gas and oil boilers

in replacement cases and in new homes. D OE conducted a detailed analysis of installation costs

when a non

- condensing boiler is replaced with a condensing boiler , with particular attention to venting issues in replacement applications. The installation cost depends on the boiler

installation loca tion which DOE determined using information from RECS 2009 and CBECS

2003

.

DOE estimated basic installation costs that are applicable to both replacement and new

home installations . These costs, which apply to all boilers , include putting in place and sett ing up

the boiler , gas or oil piping, water piping, ductwork, electrical hookup for the thermostat , permit

, and removal or disposal fees

.

For replacement installations , DOE included a number of additional costs (“adders”) for a fraction of the sample households. For non

- condensing boilers , these additional costs included updating flue vent connectors, vent resizing, chimney relining , and for a fraction of installations

included the costs for stainless steel vent

. F or condensing boilers

, these additional costs included adding a new flue vent (PVC), combustion air vent for direct vent installations (PVC), concealing vent pipes for indoor installations , addressing an orphan ed water heater (by updating flue vent connectors, vent resizing, or chimney relining), and condensate remo val.

DOE also included installation adders for new construction installations . For non

condensing boilers , a new flue vent (metal , including a fracti on of stainless steel vent ) is the only adder. For condensing gas boiler s, the adders include new flue vent (PVC), combustion air vent

for direct vent installations (PVC), accounting for a commonly vented water heater, and

condensate removal

.8

- 14 8.2.1.6 Total Installed Cost

T he total installed cost is the sum of the product price and the installation cost. MSPs, markups, and sales tax es all can take on a variety of values, depending on location, so the resulting total installed cost for a particular efficiency level will not be a single

- point value, but

rather a distribution of values

. Table 8.2.5 present s the average total installed cost for each

residential boiler product class at each efficiency level examined.

Table 8.2.5 Average

Total

Installed

Cost for

Residential

Boilers ( 2013$ )

Product Class Efficiency Level Total Installed

Cost Incremental

Cost

2013$ 2013$

Gas

- Fired Hot Water Boiler 82% AFUE

- Baseline $5,038.67

-

83% AFUE

- Increased HX Area $5,142.43 $103.75

84% AFUE

- Increased HX Area $5,160.00 $121.33

85% AFUE

- Increased HX Area $5,383.10 $344.43

90% AFUE

- Condensing Baseline $6,067.50 $1,028.83

92% AFUE

- Increased HX Area $6,371.12 $1,332.45

96% AFUE

- Max Tech $7,018.27 $1,979.60

Gas

- Fired Steam Boiler 80% AFUE

- Baseline $5,265.50

-

82% AFUE

- Increased HX Area $5,338.57 $73.07

83% AFUE

- Max Tech $5,472.84 $207.35

Oil

- Fired Hot Water Boiler 84% AFUE

- Baseline $6,860.55

-

85% AFUE

- Increased HX Area $7,149.54 $288.98

86% AFUE

- Increased HX Area $7,364.48 $503.93

91% AFUE

- Condensing (Max Tech) $8,914.48 $2,053.93

Oil

- Fired Steam Boiler 82% AFUE

- Baseline $6,855.95

-

84% AFUE

- Increased HX Area $7,136.89 $280.94

85% AFUE

- Increased HX Area $7,256.05 $400.11

86% AFUE

- Max Tech $7,438.74 $582.798

- 15 8.2.2 Operating Cost Inputs

DOE defined the operating cost by the following equation:

OC = EC+ RC+ MC Eq. 8

. 3
Where:

OC = operating cost ($),

EC = energy cost associated with operating the product ($),

RC = repair cost associated with component failure ($), and

MC = annual maintenance cost for maintaining product operation ($).

The remainder of this section provides information about the variables that DOE used to calculate the operating cost for residential boilers

. The annual energy costs of the product are computed from energy consumptio n per unit for the baseline and standard

- compliant cases (efficiency level 2, 3, and so on ), combined with the energy prices. Product lifetime, discount rate, and compliance date of the standard are required for determining the operating cost and for establishing the operating cost present value

.

8.2.2.1 Annual Energy Use Savings

For each key product class, DOE calculated the annual energy use savings for each sample household at each efficiency level as described in chapter 7.

DOE considered the possibility that some consumers may us e a higher effi ciency boiler

more than a baseline one , thereby negating some or all of the energy savings from the more efficient equipment

. Such change in behavior when operating costs decline is known as a

rebound effect.

The take

- back in energy consumption associated with the rebound effect provides consumers with increased value ( e.g., more comfortable indoor temperature ). DOE believes that, if it were able to monetize the increased value to consumers of the rebound effect, this value

would be similar in va lue to the foregone energy savings. Therefore, the economic impacts on consumers with or without the rebound effect, as measured in the LCC analysis, are the same.

8.2.2.2 Energy Prices

DOE derived average monthly energy prices for a number of geographic areas i n the

United States u sing the latest data from EIA and monthly energy price factors that it developed

. The process then assigns an appropriate energy price to each household and commercial building in the sample, depending on its type (residential or comme rcial) and its location.

EIA Data

. DOE derived 2011 annual electricity prices from EIA Form 8 26 data

. 7 The

EIA Form 8 26 data include energy prices by S tate

. DOE calculated annual electricity prices for

each RECS region or CBECS region by aver aging monthly energy prices by State to get S tate8

- 16 electricity prices

. For areas with more than one State, DOE weight ed each S tate ’s average price by its number of households in 2019

. Table 8.2.6 and Table 8.2.7 show the electricity prices by region for residential and commercial sectors, respectively

. (See appendix 8

- C for more details

. )

Table 8.2.6 Average

Residential Electricity

Prices in

20 1 1

Region

Code Geographic Area Residential Electricity Prices
2013$/kWh

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $0.17

2 Massachusetts $0.15

3 New York $0.19

4 New Jersey $0.17

5 Pennsylvania $0.14

6 Illinois $0.12

7 Indiana, Ohio $0.11

8 Michigan $0.14

9 Wisconsin $0.14

10 Iowa, Minnesota, North Dakota, South Dakota $0.11

11 Kansas, Nebraska $0.10

12 Missouri $0.10

13 Virginia $0.11

14 Delaware, District of Columbia, Maryland $0.14

15 Georgia $0.11

16 North Carolina, South Carolina $0.11

17 Florida $0.12

18 Alabama, Kentucky, Mississippi $0.10

19 Tennessee $0.10

20 Arkansas, Louisiana, Oklahoma $0.09

21 Texas $0.11

22 Colorado $0.12

23 Idaho, Montana, Utah, Wyoming $0.10

24 Arizona $0.11

25 Nevada, New Mexico $0.12

26 California $0.15

27 Oregon, Washington $0.09

28 Alaska $0.18

29 Hawaii $0.36

30 West Virginia $0.108

- 17 Table 8.2.7 Average

Commercial Electricity

Prices in

2011

Region Code Census Division Commercial Electricity

Prices
2013$/kWh

1 New England $0.15

2 Middle Atlantic $0.14

3 East North Central $0.10

4 West North Central $0.09

5 South Atlantic $0.11

6 East South Central $0.10

7 West South Central $0.09

8 Mountain $0.09

9 Pacific $0.10

DOE obtained the data for natural gas price s from EIA’s Natural Gas Navigator

, 8 which includes monthly natural gas prices by S tate for residential, commercial, and industrial

customers. For areas with more than one State, DOE weight ed each State ’s average price by its

number of households in 2020

. Table 8.2.8 and Table 8.2.9 show the natural gas pr ices by region for residential and commercial sectors, respectively

. (See appendix 8

- C for more details

. )8

- 18 Table 8.2.8 Average

Residential

Natural Gas

Prices in

201 1

Region Code Geographic Area Residential

Gas Prices
2013$/kWh

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $16.05

2 Massachusetts $14.26

3 New York $15.92

4 New Jersey $12.72

5 Pennsylvania $14.81

6 Illinois $11.02

7 Indiana, Ohio $13.47

8 Michigan $11.81

9 Wisconsin $10.95

10 Iowa, Minnesota, North Dakota, South Dakota $10.45

11 Kansas, Nebraska $11.89

12 Missouri $16.83

13 Virginia $15.44

14 Delaware, District of Columbia, Maryland $14.88

15 Georgia $19.53

16 North Carolina, South Carolina $16.47

17 Florida $20.03

18 Alabama, Kentucky, Mississippi $13.69

19 Tennessee $13.17

20 Arkansas, Louisiana, Oklahoma $13.94

21 Texas $13.08

22 Colorado $9.82

23 Idaho, Montana, Utah, Wyoming $9.39

24 Arizona $17.55

25 Nevada, New Mexico $11.02

26 California $10.32

27 Oregon, Washington $13.29

28 Alaska $9.11

29 Hawaii $56.09

30 West Virginia $13.028

- 19 Table 8.2.9 Average

Commercial

Natural Gas

Prices in

2011

Region

Code Census Division Commercial

Gas Prices
2013$/kWh

1 New England $11.12

2 Middle Atlantic $9.74

3 East North Central $9.07

4 West North Central $8.02

5 South Atlantic $10.91

6 East South Central $9.64

7 West South Central $8.81

8 Mountain $8.24

9 Pacific $10.13

DOE collected 20 11 average LPG prices from EIA’s 20 11 State Energy Consumption, Price, and Expenditures Estimates (SEDS). 9 SEDS includes annual LPG prices for residential, commercial, industrial, and transportation consumers by s tate. For areas with more than one State, DOE weighted each State’s average price by its number of households. Table 8.2.10 and

Table 8.2.11 show the LPG prices by region for residential and commerc ial sectors, respectively

. See a ppendix 8

- C includes more details.

Table 8.2.10 Average

Residential

LPG Prices

in 201 1

Region

Code Geographic Area Residential

LPG Prices
2013$/kWh

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $34.99

2 Massachusetts $38.93

3 New York $35.43

4 New Jersey $37.19

5 Pennsylvania $32.38

6 Illinois $24.71

7 Indiana, Ohio $26.88

8 Michigan $24.66

9 Wisconsin $23.46

10 Iowa, Minnesota, North Dakota, South Dakota $24.75

11 Kansas, Nebraska $24.61

12 Missouri $24.24

13 Virginia $28.198

- 20 14 Delaware, District of Columbia, Maryland $37.89

15 Georgia $29.16

16 North Carolina, South Carolina $30.36

17 Florida $42.20

18 Alabama, Kentucky, Mississippi $29.65

19 Tennessee $30.61

20 Arkansas, Louisiana, Oklahoma $29.69

21 Texas $31.59

22 Colorado $27.40

23 Idaho, Montana, Utah, Wyoming $27.43

24 Arizona $36.48

25 Nevada, New Mexico $31.36

26 California $35.21

27 Oregon, Washington $30.23

28 Alaska $39.83

29 Hawaii $66.29

30 West Virginia $29.93

Table 8.2.11 Average

Commercial

LPG Prices

in 201 1

Region

Code Census Division Commercial

LPG Prices
2013$/kWh

1 New England $26.82

2 Middle Atlantic $27.26

3 East North Central $22.49

4 West North Central $22.57

5 South Atlantic $27.05

6 East South Central $22.82

7 West South Central $24.17

8 Mountain $22.60

9 Pacific $25.29

DOE collected 20 11 average residential fuel oil prices from EIA’s SEDS. 9 SEDS

includes annual fuel oil prices for residential, commercial, industrial, and transportation consumers by s tate . For areas with more than one State, DOE weight ed each State ’s average price by its number of households

. Table 8.2.12 and Table 8.2.13 show the fuel oil prices by region for residential and commercial secto rs, respectively

. . Appendix 8

- C includes more details.8

- 21 Table 8.2.12 Average

Residential

Fuel Oil

Prices in

2011

Region

Code Geographic Area Residential Oil

Prices
2013$/kWh

1 Connecticut, Maine, New Hampshire, Rhode Island, Vermont $25.34

2 Massachusetts $26.09

3 New York $26.50

4 New Jersey $27.10

5 Pennsylvania $26.81

6 Illinois $28.13

7 Indiana, Ohio $28.04

8 Michigan $28.07

9 Wisconsin $27.81

10 Iowa, Minnesota, North Dakota, South Dakota $28.17

11 Kansas, Nebraska $28.02

12 Missouri $27.60

13 Virginia $27.81

14 Delaware, District of Columbia, Maryland $26.79

15 Georgia $27.54

16 North Carolina, South Carolina $27.89

17 Florida $28.07

18 Alabama, Kentucky, Mississippi $27.64

19 Tennessee $28.34

20 Arkansas, Louisiana, Oklahoma $25.82

21 Texas $26.07

22 Colorado $25.77

23 Idaho, Montana, Utah, Wyoming $25.78

24 Arizona $29.06

25 Nevada, New Mexico $26.57

26 California $29.38

27 Oregon, Washington $28.82

28 Alaska $27.27

29 Hawaii $28.36

30 West Virginia $28.078

- 22 Table 8.2.13 Average

Commercial

Fuel Oil

Prices in

2011

Region

Code Census Division Commercial Oil

Prices
2013$/kWh

1 New England $26.06

2 Middle Atlantic $25.32

3 East North Central $24.95

4 West North Central $25.23

5 South Atlantic $24.50

6 East South Central $25.06

7 West South Central $24.52

8 Mountain $24.42

9 Pacific $25.79



### Month l y Prices

. To determine monthly prices for use in the analysis, DOE developed monthly energy price factors for each fuel based on long

- term price data

. S ee appendix 8

- C

, for a description of the method. DOE multiplied the annual prices shown in the previous tables by the monthly price factors for each fuel to derive prices for each month.



### Electrici ty and N atural G as M arginal P rices

. Electricity and natu ral gas prices were adjusted using seasonal marginal price factors to come up with monthly marginal electricity and natural gas prices. For a detailed discussion of the development of marginal energy price factors, see appendix 8

- C

.



### Household Energy Pric e Adjustment Factor . RECS 2009 and CBECS 2003 reports the total annual consumption and expenditure of each energy use type. To take into account that household energy prices vary inside a geographical area, DOE developed an adjustment factor

based on the r eported average energy price in RECS 2009 and CBECS 2003 for each building divided by the average energy price in the geographical region in RECS 2009 and CBECS 2003

. This factor was then multiplied times the monthly price developed above to come up with the household energy price. Appendix 8

- C includes more details.

8.2.2.3 Energy Price Trends

To arrive at prices in future years, DOE multiplied the prices described in the preceding section by the forecast s of annual average price changes in EIA’s AEO 2 013

. 1 Figure 8.2.2

shows the national residential energy price trend s

. To estimate the trend after 2040 , DOE used the average rate of change during 2030

– 20 40

.

DOE applied the projected energy price for each of the nine census divisions to each building in the sample based on the building’s location

. Appendix 8

- C includes more details

.8

- 23 Figure 8.2.2 Projected Residential Energy Price s

Figure 8.2.3 Projected Commercial Energy Price s

8.2.2.4 Repair Cost

The repair cost is the cost to the consumer for replacing or repairing components in the

residential boiler that ha ve failed (such as motor pump replacement and inducer motor )

. The 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.002010201220142016201820202022202420262028203020322034203620382040 Residential Electricity Price (in 2011$/MMBtu)

Residential Natural Gas Price (in 2011$/MMBtu)

Residential LPG Price (in 2011$/MMBtu)

Residential Fuel

- Oil Price (in 2011$/MMBtu)

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.002010201220142016201820202022202420262028203020322034203620382040 Commercial Electricity Price (in 2011$/MMBtu)

Commercial Natural Gas Price (in 2011$/MMBtu)

Commercial LPG Price (in 2011$/MMBtu)

Commercial Fuel

- Oil Price (in 2011$/MMBtu)8

- 24 repair costs at each considered efficiency level were based on 201 3 RS Mean s Facilit ies

Maintenance and Repair Data 10 and a consultant report . DOE accounts for regional differences

in labor costs.

For a deta iled discussion of the development of repair costs, see appendix 8

- D

, Installation, Repair, and Maintenance Cost Calculations.

Table 8.2.14 show s the annualized re pair cost estimates for each product class.8

- 25 Table 8.2.14 Annualized Repair Cost

for

Residential

Boilers (2013 $)

Product Class Efficiency Level Annualized

R epair

C ost Incremental

Cost

2013$ 2013$

Gas

- Fired Hot Water Boiler 82% AFUE

- Baseline $12.35

-

83% AFUE

- Increased HX Area $12.75 $0.40

84% AFUE

- Increased HX Area $12.75 $0.40

85% AFUE

- Increased HX Area $13.53 $1.17

90% AFUE

- Condensing Baseline $18.54 $6.18

92% AFUE

- Increased HX Area $18.54 $6.18

96% AFUE

- Max Tech $18.54 $6.18

Gas

- Fired Steam Boiler 80% AFUE

- Baseline $11.95

-

82% AFUE

- Increased HX Area $12.13 $0.19

83% AFUE

- Max Tech $12.30 $0.35

Oil

- Fired Hot Water Boiler 84% AFUE

- Baseline $12.42

-

85% AFUE

- Increased HX Area $13.08 $0.66

86% AFUE

- Increased HX Area $13.42 $1.01

91% AFUE

- Condensing (Max Tech) $18.31 $5.90

Oil

- Fired Steam Boiler 82% AFUE

- Baseline $12.33

-
84% AFUE

- Increased HX Area $12.33 $0.00

85% AFUE

- Increased HX Area $12.39 $0.06

86% AFUE

- Max Tech $12.39 $0.06

8.2.2.5 Maintenance Cost

The maintenance cost is the routine cost to the consumer of maintaining equipment operation. DOE assumes that this maintenance cost is the same at all efficiency levels.

L abor hours and costs for annual maintenance were estimated using RS Means data . The frequency with which the maintenance occurs was derived from a consumer survey 11 on the8

- 26 frequency with which owners of different types of boilers perform maintenance. For a detailed discussion of the development of maintenance costs, see appendix 8

- D

.

Table 8.2.15 Annualized

Main tenance

Cost for

Residential

Boilers (2013 $)

Product Class Efficiency Level Annualized

Maintenance

cost Incremental

Cost

2013 $ 2013 $

Gas

- Fired Hot Water Boiler 82% AFUE

- Baseline $85.03

-
83% AFUE

- Increased HX Area $85.03 $0.00

84% AFUE

- Increased HX Area $85.03 $0.00

85% AFUE

- Increased HX Area $85.03 $0.00

90% AFUE

- Condensing Baseline $85.03 $0.00

92% AFUE

- Increased HX Area $85.03 $0.00

96% AFUE

- Max Tech $85.03 $0.00

Gas

- Fired Steam Boiler 80% AFUE

- Baseline $86.87

-
82% AFUE

- Increased HX Area $86.87 $0.00

83% AFUE

- Max Tech $86.87 $0.00

Oil

- Fired Hot Water Boiler 84% AFUE

- Baseline $112.65

-
85% AFUE

- Increased HX Area $112.65 $0.00

86% AFUE

- Increased HX Area $112.65 $0.00

91% AFUE

- Condensing (Max Tech) $112.92 $0.27

Oil

- Fired Steam Boiler 82% AFUE

- Baseline $124.18

-
84% AFUE

- Increased HX Area $124.18 $0.00

85% AFUE

- Increased HX Area $124.18 $0.00

86% AFUE

- Max Tech $124.18 $0.00

8.2.2.6 Lifetime

DOE define s lifetime as the age when a product is retired from service. DOE used national survey data, along with manufacturer shipment data, to calculate the distribution of

residential boiler lifetimes. For a detailed discussion of the development of boiler lifeti me , see appendix 8

- E

.8

- 27 Table 8.2.16 shows the Weibull distribution parameters alpha

, beta and the location

. DOE

assumed that the lifetime of a residential boiler is the same across the different product classes and efficiency l evel s

.

Table 8.2.16 Lifetime

Parameters

for

Residential

Boilers

Product Class Weibull Parameters
Alpha (scale) Beta (shape) Location (delay)

Boilers 24.55 2.00 5.00

8.2.2.7 Discount Rate s

The discount rate is the rate at which future expenditures and savings are discounted to establish their present value. The cost of capital is commonly used to estimate the present value

of cash flows to be derived from an investment. Following financial theory, the finance cost of raising funds for expenditure can be interpreted as: (1) the financial cost of any debt incurred to

maintain equipment, or (2) the opportunity cost of any equity used to maintain equipment. Similarly, the value of cost savings can be interpreted as: (1) the cost avoided by decreasing debt, or (2) the return earned from increasing equity holdings

.

DOE estimates discount rates separately for residential and commercial end users. For commercial end users, DOE calculates commercial discount rates as the weighted average cost of capital (WACC), using the Capital Asset Pricing Model (CAPM). For residential end users, DOE calculates discount rates as the weighted average real interest rate across consumer debt and equity holdings.



### Discount Rates for Residential Applications

Discount Rates for Replacement Products Purchased by Existing Households

DOE’s approach involved identifying all possible debt or asset classes that might approximate the opportunity cost of funds used to purchase efficient appliances. These are shown

in Table 8.2.17

.

As a way of weighting the debt or asset classes, DOE estimated the average percentage
shares of the various types of debt and equity using data from the Federal Rese rve Board’s Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007 , and 2010

. 13

DOE derived the mean percentages of each source of financing throughout the 7 years surveyed.

The se long

- term averages are seen as most appropriate for use in the analysis.8

- 28 Table 8.2.17 Types of

Household

Debt and Equity by

P ercentage

Shares (%)

Type of Debt or Equity 1989 1992 1995 1998 2001 2004 2007 2010 Mean

Home equity loan 4.3 4.5 2.7 2.8 2.8 4.4 4.6 4.4 3.8

Credit card 1.6 2.1 2.6 2.2 1.7 2.0 2.4 2.1 2.1

Other installment loan 2.8 1.7 1.4 1.7 1.1 1.3 1.1 1.3 1.6

Other residential loan 4.4 6.9 5.2 4.3 3.1 5.8 7.1 7.3 5.5

Other line of credit 1.1 0.6 0.4 0.2 0.3 0.5 0.3 0.8 0.5

Checking account 5.8 4.7 4.9 3.9 3.6 4.2 3.4 4.3 4.4

Savings or money market account 19.2 18.8 14.0 12.8 14.2 15.1 13.0 16.2 15.4

Certificate of deposit 14.5 11.7 9.4 7.0 5.4 5.9 6.5 6.7 8.4

Savings bond 2.2 1.7 2.2 1.1 1.2 0.9 0.7 0.6 1.3

Bonds 13.8 12.3 10.5 7.0 7.9 8.4 6.7 7.3 9.2

Stocks 22.4 24.0 25.9 36.9 37.5 28.0 28.6 23.4 28.3

Mutual funds 8.0 11.1 20.9 20.1 21.3 23.4 25.5 25.6 19.5

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007 , and 2010

.

DOE then estimated return or interest rates associated with each type of equity and debt. The source for interest rates for loans, credit cards, and lines of credit was the Federal Reserve

Board’s Survey of Consumer Finances ( SCF ) for 1989, 1992, 1995, 1998, 200 1, 2004, 2007 , and

2010

. Table 8.2.18 shows the average nominal rates in each year and the inflation factors used to

calculate real rates. DOE calculated effective interest rates for home equity loans in a similar manner as for mortgage rates, because interest on both such loans is tax deductible. Table 8.2.19 shows the average effective real rates in each year and the mean rate across years. Because the interest rates for each type of household debt reflect economic conditions throughout numerous years, they are expected to be representative of rat es that may be in effect in 2020

.8

- 29 Table 8.2.18 Average

Nominal

Interest

Rates for

Household

Debt

Type of Debt 1989

, % 1992

, % 1995

, % 1998

, % 2001

, % 2004

, % 2007

, % 2010

, % Mean

, %
Home equity loan 11.5 9.6 9.6 9.8 8.7 5.7 7.9 6.0 8.6

Credit card*

- - 14.2 14.5 14.2 11.7 12.6 13.9 13.5

Other installment loan 9.0 7.8 9.3 7.8 8.7 7.4 10.4 10.4 8.8

Other residential loan 8.8 7.6 7.7 7.7 7.5 6.0 6.3 6.0 7.2

Other line of credit 14.8 12.7 12.4 11.9 14.7 8.8 12.7 10.6 12.4

Inflation rate 4.82 3.01 2.83 1.56 2.85 2.66 2.85 1.64

Sources: Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007 and 2010

. * No data on interest rate s available for credit cards in 1989 or 1992.

Table 8.2.19 Average

Real

Effective

Interest

Rates for

Household

Debt

Type of Debt 1989

, % 1992

, % 1995

, % 1998

, % 2001

, % 2004

, % 2007

, % 2010

, % Mean

, %

Home equity loan 3.8 4.3 4.4 5.8 3.8 1.9 2.1 3.1 3.8

Credit card*

- - 11.0 12.7 11.1 9.1 3.3 12.1 11.0

Other installment loan 4.9 5.8 7.0 6.6 6.1 5.4 9.7 9.0 6.7

Other residential loan 4.0 4.7 4.8 6.0 4.6 3.3 3.4 4.3 4.4

Other line of credit 9.6 9.4 9.3 10.2 11.7 6.0 9.7 8.8 9.4

Source s : Federal Reserve Board. Survey of Consumer Finances (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010

. * No data on interest rates available for credit cards in 1989 or 1992.

No similar rate data are available from the SCF for classes of assets, so the Department

derived that information from national historical data. The interest rates associated with

certificates of deposit, 14 savings bonds, 15 and bonds (AAA corporate bonds) 16 were collected

from Federal Reserve Board time

- series data for 1977

– 20 1 2

. DOE assumed rates on checking accounts to be zero. Rates on savings and money market accounts came from Cost of Savings Index data covering 1984

– 20 1 2

. 17 The rates for stocks are the annua l returns on the Standard and

Poor’s 500 for 1977

– 20 1 2

. 18 Rates for mutual funds are a weighted average of the stock rates (two

- thirds weight) and the bond rates (one

- third weight) in each year for 1977

– 20 1 2 . DOE8

- 30 adjusted the nominal rates to real rates using the annual inflation rate for each year. Average

nominal and real interest rates for the classes of household assets are listed in Table 8.2.20

. Because the interest and return rates for ea ch type of asset reflect economic conditions throughout numerous years, they are expected to be representative of rat es that may be in effect

in 2020

.

Table 8.2.20 Average

Nominal and

Real Interest

Rates for

Household Equity
Type of Equity Average Nominal Rate

% Average Real Rate

%
Checking account

- 0.0

Savings and money market accounts 5. 0 2.0

Certificate of deposit 6. 0 1.9

Savings bond 7. 3 3.2

Bonds 8. 1 3.9

Stocks 11. 9 7.7

Mutual funds 10.4 6.2

Table 8.2.21 summarizes the shares and mean real effective rates of each type of equity

or debt. The average rate across all types of household debt and equity, weighted by the percentages of each type, i s 5.0 percent

.8

- 31 Table 8.2.21 Average

Shares and

Rates for

Household

Debt and Equity

Type of Debt or Equity Average Percentage of Household Debt plus Equity

% * Mean Effective Real Rate

% **

Home equity loan 3.8 3.8

Credit card 2.1 11.0

Other installment loan 1.6 6.7

Other residential loan 5.5 4.4

Other line of credit 0.5 9.4
Checking account 4.4 0.0

Savings and money market account 15.4 2.0

Certificate of deposit 8.4 1.9

Savings bond 1.3 3.2

Bonds 9.2 3.9

Stocks 28.3 7.7

Mutual funds 19.5 6.2
Total/weighted

- average discount rate 100.0 5.0

* Not including primary mortgage or retirement accounts.

** Adjusted for inflation and, for home equity loans, tax deduction of interest.

DOE developed a normal probability distribution of rates for each debt or asset type by using the mean value and standard deviation from the distribution. To account for variation among households, DOE sampled a rate for each household from the distributions for the appropriate asset class. Appendix 8

- F presents the prob ability distribution s for each class that

DOE used in the LCC and PBP analysis

.



### Discount Rates for Products Installed in New Housing

DOE estimated discount rates for new

- housing appliances using the effective real (after

inflation) mortgage rate for homeb uyers. This rate corresponds to the interest rate after deduction of mortgage interest for income tax purposes and after adjusting for inflation (using the Fisher formula). d For example, a 6% nominal mortgage rate has an effective nominal rate of 4.5% for a household at the 25% marginal tax rate. When adjusted for an inflation rate of 2%, the effective

real rate becomes 2.45%.

d Fisher formula is given b y: Real Interest Rate = [(1 + Nominal Int erest Rate) / (1 + Inflation Rate)]

– 1.8

- 32 The data sources DOE used for mortgage interest rates were the SCF in 1989, 1992, 1995, 1998, 2001, 200 4 , 2007 , and 2010 . Using the appropriate SCF data for each year, DOE adjusted the mortgage interest rate for each relevant household in the SCF for mortgage tax deduction and inflation (see Table 8.2.22 ). In cases where the effective interest rate is equal to or below the inflation rate (resulting in a negative real interest rate), DOE set the real effective

interest rate to zero.

The average nominal mortgage rate carried by homeowners in these 6 years was 7.9%.

As the mortgage rates carried by households in these years were established over a range of time, DOE believes they are representative of rates that may apply when amended s tandards take

effect. After adjusting for inflation and interest tax deduction, effective real interest rates on mortgages across the six surveys averaged 3.0%.

Table 8.2.22 Data Used to

Calculate

Real

Effective Mortgage

Rates

Year Mortgage Interest Rates in Selected Y ears %

Average Nominal

Interest Rate Inflation Rate 19 Marginal Tax Rate Applicable to Mortgage

Interest 20 Average Real

Effective Interest Rate

1989 9.7 4.82 24.1 2.4

1992 9.1 3.01 23.2 3.9

1995 8.2 2.83 24.2 3.3

1998 7.9 1.56 25.0 4.3

2001 7.6 2.85 24.2 2.8

2004 6.2 2.66 20.9 2.2

2007 6.3 2.85 20.6 2.1

2010 5.7 1.64 20.0 2.9

Average 7. 6 3.0

To account for variation among households, DOE sampled a rate for each household in the RECS samples from a distribution of mortgage rates. DOE developed the distribution based

on the SCF data

. Appendix 8

- F presents the probability distribution that DOE used in the LCC and PBP analysis

.



### Discount Rates for Commercial Applications

DOE calculates commercial discount rates as the weighted a verage cost of capital (WACC), using the Capital Asset Pricing Model (CAPM). Most companies use both debt and equity capital to fund investments, so their cost of capital is the weighted average of the cost of8

- 33 equity and debt financing, as estimated from financial data for publicly traded firms in the sectors that purchase residential boilers

. 12

Damodaran Online, a widely used source of information about company debt and equity financing, was used as the primary source of data for this analysis. 21 Companies included in the Damondaran Online database were assigne d to the aggregate categories listed below:

• Retail

• Property owners

• Medical services

• Industrial

• Lodging

• Food Service

• Offices

• Public

DOE estimated the cost of equity using the capital asset pricing model (CAPM). 22 The CAPM assumes that the cost of equity ( k

e ) for a particular company is proportional to the systematic risk faced by that company, where high risk is associated with a high cost of equity and low risk is associated with a low cost of equity. The systematic risk facing a firm is determined by several variables: the risk coefficient of the firm (β), the expected return on risk

free assets ( R f ), and the equity risk premium ( ERP ). The risk coefficient of the firm indicates the risk associated with that firm relative to the price variability in the stock market. The expected

return on risk

- free assets is defined by the yield on lon g

- term government bonds. The ERP represents the difference between the expected stock market return and the risk

- free rate. The cost of equity financing is estimated using the following equation, where the variables are

defined as above:


# ( ) ERP R k

f

e 

### × + = β

Eq. 8

. 4
Where:

k

e = cost of equity,

R

f = expected return on risk

- free assets, β = risk coefficient of the firm, and

ERP = equity risk premium.

By taking a forty

- year geometric average of Federal Reserve data on annual nominal

returns for 10

- year Treasury bills , DOE found for this analysis the fo llowing risk free rates for

2010

- 2012 ( Table 8.2.23 ). 24 DOE also estimated the ERP by calculating the difference between risk free rate and stock market return for the same time period. 258

- 34 Table 8.2.23 Risk free

ra te and equity risk premium,

2010

- 2012

Year Risk free rate (%) ERP (%)

20 10 6.74% 3.23%

20 11 6.61% 2.94%

201 2 6.41% 3.99%

The cost of debt financing ( k d

) is the interest rate paid on money borrowed by a company.

The cost of debt is estimated by adding a risk adjustment factor ( R

a ) to the risk

- free rate. This risk adjustment factor depends on the variability of stock returns represented by standard deviations in stock prices. So for firm i , the cost of debt financing is:

ai f di 

### R R k + = Eq. 8

. 5
Where:

k

d i = cost of debt financing for firm, i

, R

f = expected return on risk

- free assets, and

R ai = risk adjustment factor to risk

- free rate for firm, i

.

DOE estimates the WACC using the following equation:

d d e e 

### w k w k WACC × + × = Eq. 8

. 6
Where:

WACC = weighted average cost of capital,

w e = proportion of equity financing, and

w d = proportion of debt financing.

By adjusting for the influence of inflation, DOE estimates the real weighted average cost of capital, or discount rate, for each company . DOE then aggregates the company real weighted average costs of capital to estimate the discount rate for each of the ownership types in the

residential boiler analysis. An overall average is estimated by weighting each ownership type ’s discount rate by its estimated share of the residential boiler market

. These values are presented

in Table 8.2 .24 . While WACC values for any category may trend higher or lower over substantial periods of time, these values represent a private sector cost of capital that is averaged over major busi ness cycles.8

- 35 Several parameters of the cost of capital equations can vary substantially over time, and therefore the estimates can vary with the time period over which data is selected and the technical details of the data averaging method. For guidanc e on the time period for selecting and averaging data for key parameters and the averaging method, DOE used Federal Reserve methodologies for calculating these parameters. In its use of the CAPM, the Federal Reserve uses a forty

- year period for calculating discount rate averages, utilizes the gross domestic product price deflator for estimating inflation, and considers the best method for determining the

risk free rate as one where “the time horizon of the investor is matched with the term of the risk

free security. ” 23

Table 8.2.24 Weighted Average

Cost of Capital for

Sectors that

Purchase

Residential

Boilers

Sector Min Mean Max

Retail 0.8% 5.3% 18.3%

Property owners

- 1.3% 6.1% 10.8%

Medical services 0.6% 10.1% 8.9%

Industrial

- 0.2% 11.5% 8.2%

Lodging 3.7% 8.6% 15.8%

Food Service 1.8% 10.9% 8.6%

Offices 1.1% 7.9% 16.6%

Public Assembly 1.4% 10.4% 10.1%

Education 1.8% 10.7% 9.4%

Government 2.6% 8.4% 13.9%

Source : Damodaran Online Data Page: Costs of Capital by Industry Sector, 2010,2011,2012.

8.2.2.8 Compliance Date of Standard

Pursuant to 42 U.S.C. 6295( m ), the compliance date of any new energy efficiency

standard for residential boilers is 5 years after the final rule is published. Consi stent with its published regulatory agenda, DOE assumed that the final rule would be issued by the end of

20 14 and that, therefore, the new standards would require compliance beginning in 2020 . DOE calculated the LCC and PBP for all consumers as if they ea ch would purchase a new boiler in

2020

.

8.2.2.9 Base Case Distribution of Efficiency Levels

To estimate the market share s of the different efficiency levels in each residential boiler product class in 2020 , DOE developed data on the share of models in each product class that are8

- 36 of the different designs based on the latest AHRI certification directory (see Table 8.2.25 )

. 26 In addition, for gas

- fired hot water boilers, DOE accounted for the regional differences in the market shares by efficiency levels. For a detailed discussion of the development of base case

distributions , see appendix 8

- H

.

Table 8.2.25 Base Case

Market

Shares in (2020 ) by Efficiency

Level for

Boilers

EL Design Option Fraction of Models

Gas

- fired Hot Water Boiler

0 82% AFUE

– Baseline 23%

1 83% AFUE

– Increased HX Area 12%

2 84% AFUE

– Increased HX Area 14%

3 85% AFUE

– Increased HX Area 11%

4 90% AFUE

– Condensing Baseline 14%

5 92% AFUE

– Increased HX Area 19%

6 96% AFUE

– Max Tech 6%

Gas

- fired Steam Boiler

0 80% AFUE

– Baseline 14%

1 82% AFUE

– Increased HX Area 75%

2 83% AFUE

– Max Tech 11%

Oil

- fired Hot Water Boiler

0 84% AFUE

– Baseline 35%

1 85% AFUE

– Increased HX Area 27%

2 86% AFUE

– Increased HX Area 35%

3 91% AFUE

– Max Tech 3%

Oil

- fired Steam Boiler

0 82% AFUE

– Baseline 27%

1 84% AFUE

– Increased HX Area 32%

2 85% AFUE

– Increased HX Area 31%

3 86% AFUE

– Max Tech 11%

8.3 PAYBACK PERIOD INPUT S

Th e PBP is the amount of time it takes the customer to recover the assumed higher purchase cost of more energy

- efficient equipment as a result of lower operating costs. Numerically, the PBP is the ratio of the increase in purchase cost ( i.e ., from a less efficien t design to a more efficient design) to the decrease in first year annual operating expenditures.8

- 37 The equation for PBP is:

PBP =∆ IC/ ∆ O C Eq. 8

. 7
Where:

PBP = payback period in years,

∆ IC = difference in the total installed cost between the more efficient standard

- level equipment (efficiency levels 2, 3, etc.) and the baseline efficiency equipment, and

∆OC = difference in first year annual operating costs.

Payback periods are expressed in years. Payback perio ds can be greater than the life of the equipment if the increased total installed cost of the more efficient equipment is not recovered fast enough in reduced operating costs.

DOE also calculates a rebuttable PBP, which is the time it takes the consumer to recover the assumed higher purchase cost of more energy

- efficient equipment as a result of lower energy costs. Numerically, the rebuttable PBP is the ratio of the increase in purchase cost (i.e., from a less efficient design to a more efficient design) to the decrease in annual energy expenditures; that is, the difference in first year annual energy cost as calculated from the DOE test procedure. The calculation excludes repair costs and maintenance costs.

The data inputs to PBP are the total installed c ost of the equipment to the customer for each efficiency level and the annual (first year) operating costs for each efficiency level. The inputs to the total installed cost are the equipment price and the installation cost. The inputs to the operating cost s are the annual energy cost, the annual repair cost, and the annual maintenance

cost (or

, in the case of rebuttable PBP, only the annual energy cost) . The PBP uses the same inputs as the LCC analysis, except that electricity price trends are not required. Since the PBP is a “simple” payback, the required electricity cost is only for the year in which a new efficient

standard is to take effect

— in this case, 20 20

.

8.4 LCC AND PBP RESULTS

As discussed previously

, DOE’s approach for conducting the LCC and PBP an alysis relied on developing samples of households that use each of the products. DOE used a Monte Carlo simulation technique to perform the LCC and PBP calculations on the households in the sample. For each set of sample households using the equipment in e ach product class, DOE calculated the average LCC and LCC savings and the median and average PBP for each of the efficiency levels. These efficiency levels are also referred to as candidate standard levels (CSLs).

DOE calculated LCC savings and PBPs relati ve to the base case equipment that it assigned to the households. In some cases, DOE assigned base case equipment that is more

efficient than the baseline and some of the CSLs. For that reason, in those cases the average LCC impacts are not equal to the di fference between the LCC of a specific CSL and the LCC of the

base line product

. DOE calculated the average LCC savings and the median PBP values by excluding the households that are not impacted by a standard at a given efficiency level.8

- 38 LCC and PBP calcu lations were performed 10,000 times on the sample of households established for each residential product. Each LCC and PBP calculation was performed on a single household that was selected from the sample of the residential users. The selection of a

househ old was based on its sample weight ( i.e. , how representative a particular household is of

other households in the distribution

— either regionally or nationally) in the 200 9 RECS Public Use Sample, as described in chapter 7. Each LCC and PBP calculation also sampled from the probability distributions that DOE developed to characterize many of the inputs to the analysis.

Based on the Monte Carlo simulations that DOE performed, for each standard level, DOE calculated the share of households receiving a net LCC benefit, a net LCC cost, and no impact. DOE considered a household to receive no impact at a given standard level if DOE assigned it base case equipment whose efficiency is the same as, or is more than, the CSL.

8.4.1 Gas

- Fired Hot Water Boilers

Table 8.4.1 summarizes the LCC and PBP results for gas

- fired hot water boilers

.

Table 8.4.1 Gas

- Fired

Hot Water

Boilers : LCC and

PBP Results

EL AFUE Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 82% $5,138 $25,034 $30,171 NA 0% 100% 0% NA

1 83% $5,240 $24,789 $30,029 $21 3% 83% 15% 1.7

2 84% $5,258 $24,533 $29,790 $81 2% 73% 25% 1.8

3 85% $5,483 $24,315 $29,798 $65 11% 62% 27% 6.8

4 90% $6,183 $23,281 $29,463 $98 28% 53% 19% 25.3

5 92% $6,486 $23,013 $29,499 $68 42% 34% 24% 25.9

6 96% $7,132 $22,202 $29,335 $217 53% 8% 39% 20.8

Figure 8.4.1 show s the range of LCC savings for the efficiency levels considered for non

gas

- fired hot water boilers

. For each standard level, the top and the bottom of the box indicate

the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have lifecycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 39 Figure 8.4.1 Distribution of LCC Savings for Gas

- Fired Hot

Water Boilers

Figure 8.4.2 show s the range of PBPs for all efficiency levels considered for gas

- fired hot

water boilers

. - 3000 - 2000 - 1000 0 1000 2000 3000 4000

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6Average LCC Savings 2013$

Efficiency Level Gas

- Fired Hot Water Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 40 Figure 8.4.2 Distributions of PB P for Gas

- Fired Hot Water

Boilers

The rebuttable PBP for each efficiency level is shown in Table 8.4.2

.

Table 8.4.2 Rebuttable Payback

Period for

Gas

- Fired

Hot Water

Boilers

EL Technology Option Rebuttable Payback Period years

1 83% AFUE

- Increased HX Area 7.4

2 84% AFUE

- Increased HX Area 4.6

3 85% AFUE

- Increased HX Area 11.4

4 90% AFUE

- Condensing Baseline 9.7

5 92% AFUE

- Increased HX Area 10.4

6 96% AFUE

- Max Tech 11.6 0 20 40 60 80 100 120 140 160 180 200

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6Average Payback Period (years)

Efficiency Level Gas

- Fired Hot Water Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 41 8.4.2 Gas

- Fired Steam Boilers

Table 8.4.3 summarizes the LCC and PBP results for steam gas boilers

.

Table 8.4.3 Gas

- Fired

Steam

Boilers : LCC and

PBP Results

EL AFUE Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 80% $5,352 $22,172 $27,523 NA 0% 100% 0% NA

1 82% $5,424 $21,719 $27,143 $52 1% 87% 13% 1.6

2 83% $5,558 $21,501 $27,059 $414 10% 11% 79% 4.6

Figure 8.4.3 show s the range of LCC savings for the efficiency levels considered for gas

fired steam boilers

. For each standard level, the top and the bottom of the box indicate the 75 th

and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the

bottom a nd the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 42 Figure 8.4.3 Distribution of LCC Savings for Gas

- Fired Steam

Boilers

Figure 8.4.4 show s the range of PBPs for all efficiency levels considered for gas

- fired

steam boilers

. - 200 0 200 400 600 800 1000 1200 1400 1600 1800

Level 1 Level 2Average LCC Savings 2013$

Efficiency Level Gas

- Fired Steam Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 43 Figure 8.4.4 Distributions of PB P for Gas

- Fired Steam Boilers

The rebuttable PBP for each efficiency level is shown in Table 8.4.4

.

Table 8.4.4 Rebuttable Payback

Period for

Gas

- Fired

Steam

Boilers

EL Technology Option Rebuttable Payback Period years

1 82% AFUE

- Increased HX Area 2.5

2 83% AFUE

- Max Tech 4.8 0 5 10 15 20 25 30 35 40 45 50

Level 1 Level 2Average Payback Period (years)

Efficiency Level Gas

- Fired Steam Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 44 8.4.3 Oil

- Fired Hot Water Boilers

Table 8.4.5 summarizes the LCC and PBP results for oil

- fired hot water boilers

.

Table 8.4.5 Oil

- Fired

Hot Water

Boilers : LCC and

PBP Results

EL AFUE Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Pe riod (years) Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 84% $6,955 $46,013 $52,968 NA 0% 100% 0% NA

1 85% $7,249 $45,494 $52,743 $45 5% 82% 13% 8.4

2 86% $7,467 $44,982 $52,449 $197 11% 49% 40% 7.7

3 91% $9,039 $43,233 $52,272 $354 54% 8% 37% 21.7

Figure 8.4.5 show s the range of LCC savings for the efficiency levels considered for oil

fired hot water boilers

. For each standard level, the top and the bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box indicate the 5 th and 95 th percentiles. The sm all box shows the average LCC savings for each standard level.8

- 45 Figure 8.4.5 Distribution of LCC Savings for Oil

- Fired Hot

Water Boilers

Figure 8.4.6 show s the range of PB Ps for all efficiency levels considered for oil

- fired hot

water boilers

. - 3000 - 2000 - 1000 0 1000 2000 3000 4000 5000 6000

Level 1 Level 2 Level 3Average LCC Savings 2013$

Efficiency Level Oil

- Fired Hot Water Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 46 Figure 8.4.6 Distributions of PBP for Oil

- Fired Hot Water

Boilers

The rebuttable PBP for each efficiency level is shown in Table 8.4.6

.

Table 8.4.6 Rebuttable Payback

Period for

Oil

- Fired

Hot Water

Boilers

EL Technology Option Rebuttable Payback Period years

1 85% AFUE

- Increased HX Area 9.8

2 86% AFUE

- Increased HX Area 6.9

3 91% AFUE

- Condensing (Max Tech) 8.0

0 10 20 30 40 50 60 70 80 90 100

Level 1 Level 2 Level 3Average Payback Period (years)

Efficiency Level Oil

- Fired Hot Water Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 47 8.4.4 Oil

- Fired Steam Boilers

Table 8.4.7 summarizes the LCC and PBP results for oil

- fired steam boilers

.

Table 8.4.7 Oil

- Fired

Steam

Boilers : LCC and

PBP Results

EL AFUE Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Installed

Cost Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 82% $6,952 $45,571 $52,523 NA 0% 100% 0% NA

1 84% $7,233 $44,545 $51,779 $223 4% 72% 24% 6.6

2 85% $7,354 $44,045 $51,398 $465 7% 37% 57% 5.5

3 86% $7,536 $43,566 $51,103 $731 17% 10% 73% 7.9

Figure 8.4.7 show the range of LCC savings for the efficiency levels considered for oil

fired steam boilers

. For each standard l evel, the top and the bottom of the box indicate the 75 th

and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the

bottom an d the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 48 Figure 8.4.7 Distribution of LCC Savings for Oil

- Fired Steam

Boilers

Figure 8.4.8 show s the range of PBPs for all efficiency levels considered for oil

- fired

steam boilers

. - 500 0 500 1000 1500 2000 2500 3000 3500

Level 1 Level 2 Level 3Average LCC Savings 2013$

Efficiency Level Oil

- Fired Steam Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 49 Figure 8.4.8 Distributions of PBP for Oil

- Fired Steam Boilers

The rebuttable PBP for each efficiency level is shown in Table 8.4.8

.

Table 8.4.8 Rebuttable Payback

Period for

Oil

- Fired

Steam

Boilers

EL Technology Option Rebuttable Payback Period years

1 84% AFUE

- Increased HX Area 3.2

2 85% AFUE

- Increased HX Area 3.5

3 86% AFUE

- Max Tech 3.7 0 5 10 15 20 25 30

Level 1 Level 2 Level 3Average Payback Period (years)

Efficiency Level Oil

- Fired Steam Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 50 8.4.5 Standby Power Results

8.4.5.1 Gas

- Fired Hot Water Boilers

Table 8.4.9 shows the standby power LCC and PBP results for gas

- fired hot water

boilers

.

Table 8.4.9 Gas

- Fired

Hot Water

Boilers: Standby

Power LCC

and PBP

Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Incremental

Retail Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $339 $339 NA 0% 100% 0% NA

1 $2 $304 $307 $32 0% 0% 100% 1.1

2 $22 $298 $320 $19 24% 0% 76% 10.4

3 $24 $282 $305 $33 11% 0% 89% 7.5

Figure 8.4.9 show the range of LCC savings for the efficiency levels considered for gas

fired hot water boilers

. For each standard level, the top and the bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box i ndicate the 5 th and 95 th percentiles. The small box shows the average LCC s avings for each standard level.8

- 51 Figure 8.4.9 Distribution of LCC Savings for Gas

- Fired Hot

Water Boilers (Standby)

Figure 8.4.10 show s the range of PBPs for all efficiency levels considered for gas

- fired

hot water boilers. - 20

0 20 40 60 80 100 120

Level 1 Level 2 Level 3Average Payback Period (years)

Efficiency Level Gas

- Fired Hot Water Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 52 Figure 8.4.10 Distributions of PBP for Gas

- Fired Hot Water

Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.10

.

Table 8.4.10 Rebuttable Payback

Period for

Gas

- Fired

Hot Water

Boilers (Standby)

EL Technology Option Re buttable Payback Period years

1 Linear PS, Toroidal Xfmr 1.5

2 Switch Mode PS 13.0

3 SMPS, Toroidal Xfmr 9.9 0 5 10 15 20 25

Level 1 Level 2 Level 3Average Payback Period (years)

Efficiency Level Gas

- Fired Hot Water Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 53 8.4.5.2 Gas

- Fired Steam Boilers

Table 8.4.11 shows the standby power LCC and PBP results for gas

- fired steam boilers.

Table 8.4.11 Gas

- Fired

Hot Water

Boilers: Standby

Power LCC

and PBP

Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Incremental

Retail Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $331 $331 NA 0% 100% 0% NA

1 $2 $297 $300 $31 0% 0% 100% 1.0

2 $21 $291 $312 $18 22% 0% 78% 10.3

3 $23 $275 $298 $32 9% 0% 91% 7.4

Figure 8.4.11 show s the range of LCC savings for the efficiency levels considered for

gas

- fired steam boilers

. For each standard level, the top and the bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box indicate the 5 t h and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 54 Figure 8.4.11 Distribution of LCC Savings for Gas

- Fired Steam

Boilers (Standby)

Figure 8.4.12 show s the range of PBPs for all efficiency levels considered for gas

- fired

steam boilers. - 20

0 20 40 60 80 100 120

Level 4 Level 5 Level 6Average Payback Period (years)

Efficiency Level Gas

- Fired Steam Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 55 Figure 8.4.12 Distributions of PBP for Gas

- Fired Steam Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.12

.

Table 8.4.12 Rebutt

able Payback

Period for

Gas

- Fired

Steam

Boilers (Standby)

EL Technology Option Rebuttable Payback Period years

1 Linear PS, Toroidal Xfmr 1.5

2 Switch Mode PS 13.0

3 SMPS, Toroidal Xfmr 10.0 0 2 4 6 8 10 12 14

Level 4 Level 5 Level 6Average Payback Period (years)

Efficiency Level Gas

- Fired Steam Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 56 8.4.5.3 Oil

- Fired Hot Water Boilers

Table 8.4.13 shows the standby power LCC and PBP results for oil

- fired hot water

boilers.

Table 8.4.13 Oil

- Fired

Hot Water

Boilers: Standby

LCC and

PBP Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Media n Payback

Period (years) Average

Retail

Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $364 $364 NA 0% 100% 0% NA

1 $2 $328 $330 $34 0% 0% 100% 1.0

2 $21 $321 $342 $22 18% 0% 82% 10.2

3 $22 $305 $327 $37 7% 0% 93% 7.2

Figure 8.4.13 show s the range of LCC savings for the efficiency levels considered for oil

fired hot water boilers

. For each standard level, the top and the b ottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box in dicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 57 Figure 8.4.13 Distribution of LCC Savings for Oil

- Fired Hot

Water Boilers (Standby)

Figure 8.4.14 show s the range of PBPs for all efficiency levels considered for oil

- fired

hot water boilers. - 20

0 20 40 60 80 100 120

Level 1 Level 2 Level 1Average Payback Period (years)

Efficiency Level Oil

- Fired Hot Water Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 58 Figure 8.4.14 Distributions of PBP for Oil

- Fired Hot Water

Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.14

.

Table 8.4.14 Rebuttable Payback

Period for

Oil

- Fired

Hot Water

Boilers (Standby)

EL Technology Option Rebuttable Payback Period year s

1 Linear PS, Toroidal Xfmr 1.5

2 Switch Mode PS 12.7

3 SMPS, Toroidal Xfmr 9.7 0 2 4 6 8 10 12

Level 1 Level 2 Level 1Average Payback Period (years)

Efficiency Level Oil

- Fired Hot Water Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 59 8.4.5.4 Oil

- Fired Steam Boilers

Table 8.4.15 shows the standby power LCC and PBP results for oil

- fired steam boilers

.

Table 8.4.15 Oil

- Fired

Steam

Boilers:

LCC and

PBP Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Payback

Period (years) Average

Retail

Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $360 $360 NA 0% 100% 0% NA

1 $2 $324 $326 $34 0% 0% 100% 1.0

2 $21 $317 $338 $22 18% 0% 82% 10.2

3 $22 $300 $323 $37 7% 0% 93% 7.2

Figure 8.4.15 show the range of LCC savings for the efficiency levels considered for oil

fired steam boilers

. For each standard level, the top and the bottom of the box indicate the 75 th

and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box indicate th e 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 60 Figure 8.4.15 Distribution of LCC Savings for Oil

- Fired Steam

Boilers (Standby)

Figure 8.4.16 show s the range of PBPs for all efficiency levels considered for oil

- fired

steam boilers. - 20

0 20 40 60 80 100 120

Level 2 Level 3 Level 1Average Payback Period (years)

Efficiency Level Oil

- Fired Steam Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 61 Figure 8.4.16 Distributions of PBP for Oil

- Fired Steam Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.16

.

Table 8.4.16 Rebuttable Payback

Period for

Oil

- Fired

Hot Water

Boilers (Standby)

EL Technology Option Re buttable Payback Period years

1 Linear PS, Toroidal Xfmr 1.5

2 Switch Mode PS 13.0

3 SMPS, Toroidal Xfmr 9.9 0 2 4 6 8 10 12

Level 2 Level 3 Level 1Average Payback Period (years)

Efficiency Level Oil

- Fired Steam Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 62 8.4.5.5 Electric Hot Water Boilers

Table 8.4.17 shows the standby power LCC and PBP results for electric hot water boilers.

Table 8.4.17 Electric Hot

Water

Boilers: Standby

LCC and

PBP Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Media n Payback

Period (years) Average

Retail

Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $211 $211 NA 0% 100% 0% NA

1 $2 $185 $187 $24 0% 0% 100% 2.0

2 $22 $180 $202 $9 38% 0% 62% 11.1

3 $23 $168 $191 $20 21% 0% 79% 10.9

Figure 8.4.17 show the range of LCC savings for the standby efficiency levels considered

for electric hot water boilers

. For each standard level, the top and t he bottom of the box indicate

the 75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the bo x indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 63 Figure 8.4.17 Distribution of LCC Savings for Electric Hot Water

Boilers (Standby)

Figure 8.4.18 show s the range of PBPs for all efficiency levels considered for electric hot

water boilers. - 20 - 10

0 10 20 30 40 50 60 70 80

Level 2 Level 3Average Payback Period (years)

Efficiency Level Electric Hot Water Boilers (National) Average LCC Savings Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 64 Figure 8.4.18 Distributions of PBP for Electric Hot Water Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.18

.

Table 8.4.18 Rebutt

able Payback

Period for

Electric Hot

Water

Boilers (Standby)

EL Technology Option Rebuttable Payback Period years

1 Linear PS, Toroidal Xfmr 1.3

2 Switch Mode PS 11.6

3 SMPS, Toroidal Xfmr 8.9 0 5 10 15 20 25

Level 2 Level 3Average Payback Period (years)

Efficiency Level Electric Hot Water Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 65 8.4.5.6 Electric Steam Boilers

Table 8.4.19 shows the standby power LCC and PBP results for electric steam boilers.

Table 8.4.19 Electric

Steam

Boilers: Standby

LCC and

PBP Results

EL Life

- Cycle Cost ( 2013$ ) Life

- Cycle Cost Savings Median Paybac k

Period (years) Average

Retail

Price Average

Lifetime Operating

Cost Average

LCC Average Savings ( 2013$ ) % Households with

Net

Cost No Impact Net

Benefit

0 $0 $211 $211 NA 0% 100% 0% NA

1 $2 $185 $187 $24 0% 0% 100% 2.0

2 $ 22 $180 $202 $9 38% 0% 62% 11.1

3 $ 23 $168 $191 $20 21% 0% 79% 10.9

Figure 8.4.19 show the range of LCC savings for the standby efficiency levels considered

for electric steam boilers

. For each standard level, the top and the bottom of the box indicate the

75 th and 25 th percentiles, respectively. The bar at the middle of the box indicates the median; 50 percent of the households have life

- cycle cost savings above this value. The “ whiskers ” at the bottom and the top of the box indicate the 5 th and 95 th percentiles. The small box shows the average LCC savings for each standard level.8

- 66 Figure 8.4.19 Distribution of LCC Savings for Electric Steam Boilers (Standby)

Figure 8.4.20 show s the range of PBPs for all efficiency levels considered for electric

steam boilers. - 20 - 10

0 10 20 30 40 50 60 70 80

Level 2 Level 3Average Payback Period (years)

Efficiency Level Electric Steam Boilers (National) Average LCC Savings

Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 67 Figure 8.4.20 Distributions of PBP for Electric Steam Boilers (Standby)

The rebuttable PBP for each efficiency level is shown in Table 8.4.20

.

Table 8.4.20 Rebutt

able Payback

Period for

Electric

Steam

Boilers (Standby)

EL Technology Option Rebuttable Payback Period years

1 Linear PS, Toroidal Xfmr 1.3

2 Switch Mode PS 11.6

3 SMPS, Toroidal Xfmr 8.9 0 5 10 15 20 25

Level 2 Level 3Average Payback Period (years)

Efficiency Level Electric Steam Boilers (National) Average Payback Period Average; Median; Box 25%

- 75%; Whisker 5%

- 95% median

average8

- 68 REFERENCES

1. Energy Information Administration, Annual Energy Outlook 2013 with Projections to

2040 , 2013. Washington, DC. < http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf >

2. RS Means Company Inc., RS Means Residential Cost Data . 27th Annual Edition ed. 2013: Kingston, MA

3. U.S. Department of Energy: Energy Information Administration, Residential Energy Consumption Survey: 2009 RECS Survey Data, 2013. (Last accessed March, 2013.)

< http://www.eia.gov/consumpt ion/residential/data/2009/ >

4. U.S. Department of Energy: Energy Information Administration, Commercial Buildings Energy Consumption Survey, 2003. (Last accessed September, 2013.)

< http://www.eia.doe.gov/ emeu/cbecs/ >

5. U.S. Department of Energy

- Energy Efficiency & Renewable Energy, Final Rule Technical Support Document: Energy Efficiency Standards for Consumer Products: Central Air Conditioners, Heat Pumps, and Furnaces , 2011. Washington, DC.

6. RS Means Company Inc., RS Means Residential Cost Data . 31st Annual Edition ed. 2012: Kingston, MA

7. U.S. Department of Energy

- Energy Information Administration, Form EIA

- 826 Database Monthly Electric Utility Sales and Revenue Data, 2013.

< http://www.eia.doe.gov/cneaf/electricity/page/eia826.html >

8. U.S. Department of Energy

- Energy Information Administration, Natural Gas Navigator . 2013. http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm

9. Energy Information Administration, 2011 State Energy Consumption, Price, and Expenditure Estimates (SEDS) , 2013. Washington, DC.

< http://www.eia.doe.gov/emeu/states/_seds.html >

10. RS Means Company Inc., RS Means Facilities Maintenance & Repair Cost Data . 2013. Kingston, MA.

11. Decision Analysts, 2008 American Home Comfort Study: Online Database Tool , 2009. Arlington, Texas. < http://www.decisionanalyst.com/Syndicated/HomeComfort.dai >

12. Modigliani, F. and M. Miller, The Cost of Capital, Corporations Finance and the Theory

of Investment

. American Economic Review , 1958. 48(3): pp. 261

- 297

< http://www.jstor.org/stable/1809766 >8

- 6 9 13. The Federal Reserve Board, Survey of Consumer Finances 1989, 1992, 1995, 1998, 2001, 2004, 2007, 2010

. < http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html >

14. The Federal Reserve Board, Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: CDs (sec ondary market), Maturity: 6

- month, Frequency: Annual, Description: Average rate on 6

- month negotiable certificates of deposit (secondary market), quoted on an investment basis, 2013.

< www.federalreserve.gov/releases/H15/data.htm >

15. The Federal Reserve Board, Federal Reserve Statistical Release, Selected Interest Rates, Historical Data, Instrument: State and local bonds, Maturity: 20

- year, Frequency: Monthly, Description: Bond buyer go 20

- bond municipal bond index, 2013.

< www.federalreserve.gov/releases/H15/data.htm >

16. The Federal Reserve Board, Federal Reserve Statistical Release, Selected Interest Rates,

Historica l Data, Instrument: Corporate bonds/Moody’s Seasoned AAA, Frequency: Annual, Description: Moody’s yield on seasoned corporate bonds

— all industries, AAA,

2013. < www.federalreserve.gov/release s/H15/data.htm >

17. Mortgage

- X

- Mortgage Information Service, Cost of Savings Index (COSI) Index History, 2013. < http://mortgage

- x.com/general/indexes/default.asp >

18. Damodaran Online Da ta Page, The Data Page: Historical Returns on Stocks, Bonds and

Bills

- United States, 2013. Damodaran. < http://pages.stern.nyu.edu/~adamodar/ >

19. U.S. Department of Labor

- Bureau of Labor Statistics, Bureau of Labor Statistics Data, Prices & Living Conditions, 2012. < http://data.bls.gov >

20. National Bureau of Economic Research, U.S. Federal and State Average Marginal
Income Tax Rates, 2010. (Last accessed February 25, 2011.)

< http://www.nber.org/~taxsim/marginal

- tax

- rates/plusstate.html >

21. Damodaran Online, Data Page: Costs of Capital by Industry Sector, 2012. Damodaran. (Last accessed February, 2013.) < http://pages.stern.nyu.edu/~adamodar/ >

22. Ibbotson Associates, Cost of Capital 2001 Yearbook . 2001. Ibbotson Associates: Chicago, IL.

23. Board of Governors of the Federal Reserve System, Federal Reserve Bank Services Private Sector Adjustment Factor . 2005: Washington, DC.

24. Board of Governors of the Federal Reserve System, H.15 Historical Data Selected
Interest Rates, 2013. (Last accessed February, 2013.)

< http://www.federalreserve.gov/releases/h15/data.htm >8

- 70 25. Damodaran Online, Data Page: Historical Returns on Stocks, Bonds and Bills

- United
States, 2012. Damodaran. (Last accessed February, 2013.)

< http://pages.stern.nyu.edu/~adamodar/ >

26. Air Conditioning Heating and Refrigeration Institute, Consumer's Directory of Certified Efficiency Ratings for Heating and Water Heating Equipment (AHR I Directory September 2013), 2013. (Posted September 2013) (Last accessed September, 2013.)

< http://www.ahridirectory.org/ahridirectory/pages/home.aspx >